29th 2014. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. i'm andrew ross-sorkin and becky quick is off for the holidays. families are waiting on the whereabouts of the missing plane. if it crashed, 2014 will go down as one of the deadliest years in aviation history in recent memory. we are also watching another scary transportation story up fold overseas with a greek ferry catching fire. rescue workers are working to air lift passengers to safety as the fire continues to burn. the normand atlantic was on fire

yesterday as many people said the decks are so hot that their shoes were melting beneath their feet. five people have died and many were injured among the 478 passengers and crew. among the other stories we are watching today, sony says the playstation network is back online although it is still having problems. playstation has been dealing with three days of disruptions that began on christmas and a group of hackers calling themselves the lizard squad is claiming credit. speaking of sony it's controversial movie "the interview" made $18 million in the opening weekend. and i think it was mostly independent theaters. the total was $15 million in online sales and another $2.8 million in studio sales. the firm was purchased or rented online more than 2 million times on the four days through saturday. four days after a competitor apple is now making "the

interview" available on itunes. and in news watch today, oil clashes in libya smoking worries about supply from the opec member. a fire caused by fighting at one of the export terminals destroyed 800,000 barrels of crude, that is more than two days of libya's output. we know how much 800,000 -- that doesn't sound like a lot in terms of production. the markets are not reacting, at5 dollars. we have had a slow steady move higher on the markets, but not -- we have a few players out today. i don't know what is going on in st. bart's but more is going on there than at the new york stock exchange. did you see the rumor that the big board will be sold or something? that was over the weekend. >> i saw a line about that. >> and then close down some day,

possibly. >> possible. i don't know if it is really possible. do you think it is possible? >> i do think it is possible. >> i was just thinking what is going to happen to -- are we -- they are all going to be down in atlanta? >> what if they turn it into a studio? >> some could argue that as a studio. >> or a nightclub. we'll see whether any of that happens. was it not in a reputable paper, that story? >> i'm not sure. i think it was in another paper. all those papers are -- >> which one? >> i think it was in "the new york post." >> was it in "the post"? >> i don't think "the post" is reputable. >> i read two papers on sunday and don't think either one is reputable. i'm not going to name which ones that they are. >> i can guess. let's take a quick look at

europe. i do read the weekend "wall street journal." the france and ftse in germany -- >> i wouldn't disparage the daily news if i were you. >> throw them in there, too. down 8.5% for greece with things getting dicy. you wonder, chouldould that fuse be lit again in terms of europe and what happens? in asia japan's government approved 29 billion in spending but the japanese stock suspected a case of ebola. a man who returned to japan from sierra leone last week was suspected of contracting the deadly virus. test results are expected by tomorrow morning. if confirmed, it would be the first positive diagnosis in all of asia. okay. let's take a look at the ten-year because once again, i was looking at some mark brandt

stuff. and in five years when people said rates have to rise more so with the fed finally starting next year at some point, that empathies the yields are headed higher. he still says lower. check out the dollar which last i looked was fine. i think we'll be able to -- >> are we going to make hay over there? >> we don't use euros in switzerland. that is so confusing about the whole place. >> we should start using -- we should have a davos screen. >> 13 different currencies -- >> the swiss franc is running -- >> 13 different ones you need to keep track of. >> have you talked about gold yet? >> no i guess we can. we'll take a quick look at gold. then you can intro our guest. gold is at 1192. not above 1200.

we'll talk about the key presidential vote going on in greece today to threaten the future of the country's international bailout. they failed to secure the needed votes and that could pave the way for national elections. wilfred frost is joining us with the latest from london. wilfred? >> andrew thank you very much. greek stocks are selling off after the government failed to secure enough votes to elect the presidential nominee paving the way for snap elections early next year. the parliament voted in favor of him by 168 votes, but that was 12 shy of the 180 required. if you can see down at the bottom here, athens stock market is off 8.3% so far today. that has had an effect on continental europe. at the top, joe, you said will this have a big effect on the rest of europe? so far nothing to the size of the athens stock market move down 8.3%. it was down 11% just as the vote was announced but recovered some ground. we are looking at the bond buying for the safehaven of germany off the back of this admitting to a record low of

0.95%. the opposite is the ten-year in greece up to 8.6% so far at the yield. and spain and italy have seen yields tick up. so in the bracket of potential contagen, but nothing significant to the size of the moves of greece. let's look at what has happened to the euro. that i suppose is a good indication of whether this is a wider contagen issue because the euro has not moved that significantly. a bit of volatility as you can see around the results announcement but nothing significant flat on the day at 1.2188. where has the biggest move been? in the greek bank some of them on the best part of 15% to 16%. these were 5% more a half hour ago recovering ground. the euro bank is down 16%. perez is down 13% so far. with that back to you guys. thank you, wilfred. tough situation. >> now back to the missing

airasia plane. hope is fading for a rescue. martin song is joining us from the airport in singapore. what can you tell us martin? >> reporter: yes, hi good morning. you're right, i guess hope does seem to be fading as we come to 36 hours now since we last had contact with the plane or lost radio contact with the plane. day two of the search and rescue is just wrapping up. we are waiting to see whether it continues into the night. but the bottom line is so far nothing, nothing substantive or concrete. no sign or evidence of the plane at all. earlier today indonesia's head of their search and rescue operations had a pretty bleak assessment. >> our evaluation of the coordinates that we received suggested it is under water. so our presumption now is that the aircraft is under the sea. kit be expanded based on evaluation. >> reporter: so pretty direct and brutal and people your given

that nothing definitive has been found yet, but in the meantime the boss of airasia tony fernandez has focus on the people, the 162 passengers and crew on board and their family and friends. >> we don't want to speculate. right now they have been missing for 12 hours and there's a huge sense of aggression here but we'll stay strong. and we our first priority now is to look after the family and do whatever we can in this period. >> reporter: so tony fernandes has airasia listed in trade here today with shares crushed finishing down 8.5% in one session. at one point they were down 13%. before this incident airasia shares were up a fifth year to date. back to you.

>> thank you, martin. we appreciate that. thank you very much. a lot of speculation, andrew these are very safe planes. interesting. that part time of the world, we don't -- we don't know at this point. >> we're going to talk to an aviation analyst in a little bit. but you know i'm an anxious flyer, so these kind of situations with an airbus -- >> as we talked about 2014 being one of the deadliest years but not here. not domestically, right? >> so then the question is is it pilot error or mechanical failure? >> god knows in that part of the world. people are still working 24 hours a day in certain parts of the world to figure out ways of getting on board planes undetected with -- you know they are still trying. i have no idea what happened here. and they had bad weather. right? i'm sure i know this is the third one, right? in that part of the world.

>> i'm more -- i am suspecting it is weather. we have lots of reports -- >> there's weather around the world. >> yes but this was a big weather storm. lightning, i think i told you -- >> airasian? >> no i was on a delta flight with an engine blew out while i was in the air, which is why i get as scared as i do. >> you're fine. >> here i am. but as a result i am conscious that lightning can knock out the engine. and the question is you should have another enjoy to keep you going, but if you have a major storm, things can happen. >> in the event we'll move on to what we normally focus on the markets in the homestretch of 2014. december had stellar trading action. will january live up to expectations? joining us is anthony chan. and john bye, co-founder and managing partner at global investors. high single digits next year? what is your forecast?

>> 20%off side. >> at least it is not high single digits right? that would be 30-plus 2015. then 20 next year? do you think that we can do that without getting too bullish? without too comeplacentcomplacent? do you think that will continue? >> yes i think it's a perfect storm of stuff happening, seeing the return of the consumer credit. if the rate cycle begins next year, we have done a lot of imper call studies of the federal rate cycles, which shows positive market movement previous to it. and an investment cycle, i think we feel it's in the early stages with room to go there as well. >> if i would look at fundamentals, i would say i feel the same way. but do you factor in the notion that these are well-known? that all the bullish things that you're talking about are well-known by most participates

in the market? and it's better when people are doubting a market? >> yeah. i think it helps to be a contrarian. we are the most bullish with a s&p target of 23 and 25. on a longer-term basis, we are predicting market to be mid-3000s by the end of this decade. >> where are multiples going to be by the end of next year? >> 16.5. 142 for s&p. 16.5 times brings us to 23 25. >> okay. anthony, we'll focus on what the economic backdrop is with the 5% print, is that really doable for year three? is 3.25 doable or where are you? >> i think real gdp in 2015 can

be somewhere in the neighborhood of 3% maybe as much as 3.5%. but i would keep it close to the 3%. as for the equity market i think the equity market will be good for 2015 not as good as 2014, but our view is that it's probably going to be positive but in the neighborhood of 8% to 10%. i do agree that the backdrop is positive for equities even if the federal reserve raises rates. some of the things i have done is to look at periods in history when the federal reserve is raising rates because the economy is getting better. and i measure that by looking at the change in the federal funds rate versus the change in the consumer price index. and i think in 2015 you'll see that the federal funds rate will rise much faster than the increment in the consumer price index. and when you look at periods in history back to the 1990s, for example, and you look at the federal reserve raising rates, the s&p 500 on average goes up by about 10.5% when the federal

reserve is raising rates, not because inflation is rising compared to other periods when the inflation rate is rising faster. and then you get the s&p 500 rising just a little over 3%. so yes, the positive backdrop for the federal reserve is there. and for the equity markets of 2015. >> yeah. so that's -- you're sort of describing a goldilocks scenario as well. in the last year anthony, what -- was there some headwind that oil or the economy will do better as we saw oil come down. what changed between the ability for the economy to finally gain traction this year versus the previous three or four years? what is different? why is it better? >> i think, joe, the reason things are getting a lot better is because we're starting to get the lagged impact of all the stimulus that has been applied to the economy. for years the federal reservist

kept interest rates as very low levels. they are not raising rates. they have done quantitative easing and you have gotten a lot of critics out there saying all this stuff done by the federal reserve has not had an impact. as people were saying that the economy was getting prepared. look at what has happened to household wealth. we lost over 13 trillion dollars during the financial crisis. well, guess what? we not only got it back but we got almost the equivalent incremental increase on top of that in household wealth. so balance sheets are getting repaired. and as balance sheets are getting repaired, households are feeling a lot more comfortable. it's no surprise you're seeing record levels of car sales because people are feeling a lot more comfortable. i know that during the holidays people are saying oh they are not really buying that much at the malls. but if they are buying the big-ticket items like in november. we saw one of the strongest novembers in many many years. buying a car is worth more than a thousand t-shirts.

if you are not buying a t-shirt but a brand new car, consumers are feeling more comfortable and that will really protell the economy in 2015. i think the consumer will going to come back. and guess what else is going to happen? we are going to start to see businesses starting to spend a little more money on business investment. we're already starting to see it. i think that's going to be another story for 2015 to continue to propel us a little bit higher. why is that going to happen? remember that in january, more than 20 states are going to be raising the minimum wage. what does that mean? it means that businesses will go crazy trying to spend more money on technology in order to at least partially offset the rise in labor costs. not to mention the fact that the average earnings are already rising. that is in respect to the minimum wage. >> any worry that we'll have a correction blip anything in the first or second quarter of this year only because we have gone on this run? and i ask the question because so many people even over the holidays, i know family members said, i think i missed the train. the train has left the station.

should i be getting in now? the market has gone on this run. there's an expectation that people do dump some things sometimes in january and february. >> yeah, you know, we don't like to predict dips but if you look at -- let's just assume that the fed rate hike is going to start in the middle of the year. six months prior to that you have seen, again, looking at 14 rate hike cycles with a steady increase of 7% in the market. and you've seen a fly in the market for three months and then return to growth in the market six months thereafter. i don't know -- outside of any external factors, we don't really forecast any correction. >> no reason for -- >> don't forget as i mentioned on the consumer credit side the fair reporting act, which keeps a report of bad credit for seven years, that starts to roll off. so that means is that the 2007

bad credit people, they get a clean slate starting this year. that's about 5.5 million households. 7.5 of the 2015 and 9.5 for 2016. that's 22.5 million households that get reset on their credit record, which improves their credit ability to borrow and then, of course for some people, it creates employment. >> well, anthony, we have to run, but your final for expectations in corporate -- i think they are lagging in corporate times, but we put a lot of stock in ceos here on cnbc. a lot of people have said the reason corporations aren't investing is because they don't see demand while others argue uncertainty from obamacare and taxes and all these things. if you really do seem to start

when demand picks up maybe all along it was demand or a combination of both. we'll talk about this. >> real quick, joe. real quick, the 5% growth that we just saw in real gdp definitely represents the man coming back. by the way, close to 3 million jobs we'll create in 2014 and perhaps 3 million more jobs in through 2015 are definitely going to lead to more demand. >> all right. hopefully we'll get some full-time jobs that pay over $100,000 even though now we're seeing oil and gas, we saw those articles over the weekend. they are cutting back. john thank you. anthony, thank you as well. >> okay. still to come on "squawk box" this hour the skyrocketing cost of education in the coming revolution of schooling. we'll talk about that next. plus at 6:30 eastern, retail winners and losers. remember there are only 360

days before christmas of 2015. and we'll bring you a story and the leg up of competition in technology. but first, we'll bring you some of 2014's most respected guests. >> my wish for 2015 is that federal reserve officials recognize it's prudent to be patient, i.e. they don't tighten monetary policy next year. ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ the evolution of luxury continues. the next generation 2015 escalade.

welcome back to "squawk box." we are joined by the weather channel now, it was balmy over the weekend. >> he is wearing a miami-like tie today. i know he's in atlanta. >> he writes down his response as he knows what's coming every day. >> i like to keep you guessing. it's atlanta, i'm never in full winter mode. you were righters it was mild in the northeast over the weekend. you'll get another nice day today and then things are going to go downhill. we'll talk about what's happening on the radar. rain down across the carolinas and the southeast to shift offshore. lit miss the big cities of new york to boston. but there's cool air in place. look at this across the northern plains. feels like 24 below in bismarck. 7 below in minneapolis. and if you don't live there, you probably think of the places as cold and they are, but even for them, we're talking 25 to 30

degrees below average as the cold air rotates down from canada and gets all the way down to texas. it's going to be freezing in texas for new year's day and then rotates eastward. so along the eastern seaboard the cold air gets in here new year's eve and new year's day. it won't be crazy cold but it will be below average. tomorrow morning, look at the low temperatures well below zero. the air modifies but shifts off to the southeast. 5 below in minneapolis. kansas city coming in at 4. dodge city at zero. then as we head into new year's eve, we'll take a look at temperatures here. this is from midnight. so if you make it until midnight, 27 in new york city. 23 in boston. 30 degrees should do it in washington, d.c. so you know by and large, the temperatures are just a little below average. but i think it's been so mild lately to feel worse that it is because of the swing back and forth. meanwhile, there's a winter storm out west. these aren't super heavily populated areas.

denver is the biggest city to see snow. down to flagstaff as well. we'll leave you a tidbit here las vegas down to the strip could be looking at one to three inches of snow. and i already volunteered to go there to do live shots but i haven't heard back yet. it's a hard assignment. >> the farmer's almanac said it would be a snowy year. i know that's like seeing a black cat walk across the street, but it's been a mild winter. is there a chance for 80 inches in denver still, is that possible? >> sure. not just the farmer's almanac, on a professional level, there's very little skill in it. it's so hard. >> that's what you said right there. the people that do the farmer's -- even when it is not just superstition? >> well, there are great recipes involved in the farmer's almanac. there's no way to forecast three to four months ahead of time. if you could there are a lot of cool things you can do that

with. >> yeah we are forecasting 50 years ahead. >> yeah that's a totally different conversation. but yeah the seasonal forecasting thing, i say 10 to 15 days is really it for forecasting. >> oh, yeah. i trust you on 10 to 15 days. you know how i think you check the weather? you look out the window. same way i check it. >> hold on. before i let you go 10 to 15 days in temperatures is really good. as far as snow and stuff like that, it gets more complicated. you can go out that range. >> rain and thunderstorms, it can -- it is like chaos theory isn't it? things can happen that you have no way of knowing about 72 hours ahead of it isn't it? >> it happens to me. when i move to atlanta, the pop-up thunderstorm, i always lived in the northeast, literally i'll check the radar and say, i'm going to the pool. by the time i get to the pool it's raining. so there's nothing there and all of a sudden it pops up. very frustrating as a weatherman. >> thank god we're in a business

here where stocks are so easy to predict. >> oh yes. a walk in the park. >> talk about chaos there. thank you. we'll see you later. >> see you. as 2014 draws to a close, cnbc is breaking out the 2015 playbook. we're looking at ways to make money in the coming year. in this hour we'll talk about education. here's sharon epperson. >> the cost of going to college is skyrocketing. total student loan debt in the u.s. has topped $1 trillion and is now greater than every other major category of consumer debt except for mortgages. the sticker shock is only going to get worse. here are three predictions. first, family income won't keep up with the lies in college costs. over the last three decades, the cost of tuition at four-year universities more than tripled. as the average family income increased by 6% over that same period. in 2015 we'll see more of the same as families continue their

struggling to pay for education. second, government programs will fall short. obama's proposal to expand el jikt jiblt eligibility program. third, we'll have more graduates than ever. even though people are shelling out more to pay for college, they are buy sbog a bigger upside. the potential for higher income with a college degree. next june we'll see an even larger incoming class with enrollment up more than 1% in 2015. congratulations to all the future graduates. coming up retail winners and losers this holiday season. plus one analyst picks for buys in the sector heading into the new year. as we go to break, a look at last week's s&p 500s winners and losers. ♪

welcome back. i'm joe kernan along with andrew ross-sorkin. becky quick is spending time with family. it's a great time to spend with

your family. and molten rock from the volcano is creeping closer to the marketplace. now only 690 yards away from a shopping plaza. the hawaiian volcano observatory says the lava flow is active in several places. now that would get your attention. 690 yards. >> that has my attention right there. we'll tell you other headlines for this hour google has been blocked in china. they suggest that beijing is trying to eliminate google's presence in the country to weaken their market overseas. and a group of hackers is claiming to expose sony and playstation's personal data. they will contain the data of 13,000 users. the hacker is claiming to leak a number of games. the sony thing keeps -- do you

see the crazy paparazzi video they got over the weekend? >> i didn't see it. who was harassing her? >> tmz, they bring the camera right up to her. she is just off the airplane in wet sweatpants and ask her if she should have done the interview. i think she handled it quite well. i mean at a relative basis to having a camera in your face jumping off the airplane. >> was she cursing or anything? >> no. >> did she get nasty with the paparazzi or anything? >> no. she tried to dodge them for a little bit. anyway a bankruptcy court allowing aereo to auction the tv streaming technology assets. the company reached an agreement with broadcasters over a sale process. we are also taking a peek inside this morning at the 2015 playbook for retail this morning. checking in with the top ranked

institutional investors all-american research team for the sector. that gentleman is matt vos from jpmorgan. your top picks are nike tjx vf corps and foot locker. we'll walk through each to explain why. >> great. happy holidays. >> happy holidays to you. so nike has been on a tear already. how much more does it have to go? >> i think nike has 20% to 25% this year. i think combination of global opportunity, china, europe plus the u.s. is hitting on all cylinders right now. i think this is one of the compounding models for 2015 that you want to be associated with. athletic and outdoor to us that's what is working. i think that will continue to work. so nike and vf corps, those are the two brands. those are the ones working and i think they will continue to work in 2015. >> how much of the growth is going to be purely economic versus what joe keeps asking a lot of the guests about, what is

multiple expansion? >> look, to me, i've been doing this a long time. we don't push for multiple expansion. vf has the multiple. now it is earning expansion coming from international with higher margins in china. higher margins in europe. you have the u.s. still solid and it comes down to product innovation and the technology that they are putting into the product. and i think that is what separates them. >> you like footlocker as well, we should note. >> footlocker is the lay-up. you get that 12 times, you've had a pull-back here post ken hicks departure. they are in the right place at the right time. and the that will be continued execution. the model for the next three to five years at 12 times earning, i think that's a steal here. >> you're just drafting up nike and drafting athletics broadly. >> yes plus they have the omni channel capability. and that's what is working. foot locker macy's they made

the investments and that's the way to win in the online and brick and mortar combination. >> make your case for tjx. >> we like tj and burlington. the value proposition -- the value proposition -- >> when was the last time you've been to burlington? enter >> burlington coat? i don't think i have ever have been. in a previous life. >> so what these guys have is the value proposition. the it's branded cycle in the first inning. that separates those two. the prices gaping share, that's a lot of what is going on with the department stores. macy's sets itself apart, but some of the others like jp pen knee, they are having a harder time with relevance. >> i have been to one but rem recommended the stock. i'm long burlington coat.

>> matt while we have you, is there anybody to stay away from just so we make sure we have all the bases covered? >> i think some of the under investors relating to the omni channel. i think that's where you have to be more careful. i think anybody regional the cost of business are going higher here with the investments. i would stay away from dillard's. regional, under investing and online, and the weaker players. look, i still think gas prices are $1,000 in the consumers pockets over the next year but there's still winners and losers. so stick with best in class. i think marketshare winners with value proposition is the way to go in 2015. >> matt we appreciate it. happy holidays to you. joe and i are headed to burlington to buy a coat after the show. >> we have to go to davos this year so we need coats to wear. >> here's the article of clothing -- >> do they sell coats there? >> andrew fears are being

rekindled about the airlines. it's here. as you said it's high altitudes and ice in weather. that was well above 40,000 feet. the weather wasn't good. storm clouds questions about weather and ice accumulation at high altitudes are now in the minds of many experts as well as average flyers like you. i wonder how -- we'll be on our way to davos. i'm going to talk to you before we go because i think don't we sort of go -- we go north. into scary areas, right? >> i have done that flight and feel good about that flight. swiss air. >> that's so expensive. is it company money or something? >> i think it is company money, yeah. who are you on? >> i always fly united. >> for the miles. >> for the miles. i like united and continental.

>> i think swiss air, you get miles with united. >> i'm good with united. >> no, i think they are partners. >> are they? >> i think so. >> i don't know do they fly out of newark? >> jfk. >> i'm not going to jfk. it takes me longer to get there than switzerland. the largest pr firms -- >> i'm wrong, they do fly from newark. >> swiss air does. >> they do? it's private equity right? nothing to do with gyms or stairmasters. at 6:50 eastern, how technology is changing the game for many professional sports teams. i'm interested in this and what my -- there are 43 different muscles or something. i'm going to talk about this because there's a way you can tell people are lying. 17 different ways to tell if you're lying. >> we try not to use this on the show. >> top of the next hour welcome ken rogoff.

i can't wait to talk to him about the whole notion of what caused this slow five-year period after the crisis. but first heading to break, here's a quick check on what's happening in the european markets right now. not much. in my world, wall isn't a street... return on investment isn't the only return i'm looking forward to. for some every dollar is earned with sweat, sacrifice, courage. which is why usaa is honored to help our members with everything from investing for retirement to saving for college. our commitment to current and former military members and their families is without equal. start investing with as little as fifty dollars.

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welcome back to "squawk box" this morning. among the stories catching our attention, the story in "the wall street journal" looks at why the private equity firms are giving up their claim to fees. namely facing pressure from regulators. currently the firm gets fees from companies that are side services. instead of keeping the money, the new funds will pass fees

onto investors for the first time. what is happening here i don't know if people always appreciate this, but if you're from blackstone, you collected the 2 in 20 but you collected investment banking fees and consulting fees. in some cases, you take the consulting fee even if you had sold the company, you would still benefit from years after with the company sold to someone else. all the fees are now coming back to the investor. by the way, shares of companies like blackstone are public companies. so public shareholders should benefit from that. >> you always during the controversy in the last election with mitt romney and everything else, we went back and forth many times, are they really -- are there times when the companies are in bad shape so they go in and save some of the jobs which some are lost obviously, but some are safe. you always point out some of the companies may not have been in bad shape until they leveraged the hell out of them to take the dividends out.

>> in some cases. >> and sometimes it sets up companies -- >> i think it is generally a mixed record but i think that they have also done some tremendous and terrific things over the years. so it's hard to -- >> eventually if the market works properly, then a lot of the fees would get compressed as more and more people go in. >> but in the walmartization of the world, there are two places where it has not happened. >> i hear a lot of investment bankers that used to -- you're doing pretty well at half of the compensation from five ten years ago. you're doing pretty well to get that, i hear. coming up, what is in a facial expression? how mark lazry's bucks uses technology to read faces. too bad they couldn't figure out whether parker's knee could hold up and other gentlemen who have

not done as well. and that changed the game. "squawk box" will be right back.

kevin, i am sold on the parker story, but what i don't understand is out of the 43 muscles in his face which ones are showing that he was going to be more of a success in the nba than the gentleman that was not selected by the bucks? >> that's good point. this is a great building block for the future but unfortunately the methodology doesn't include this. and whether i could hire this guy. can he watch me right now with my expressions to tell why i can't chip on the golf course. or does he need to watch me and my facial expressions on the golf course? how do you figure that out? >> i've got to be careful.

we've got to save that up for another story. companies like nbc and consumer marketing companies -- >> really? >> i've written about it being used by politicians. that conjures up big brother creepy mind reading. >> totally. >> but it's been very hush hush. you can understand why. and some of the reasoning behind the hush hush is someone like you know a general manager for the bucks or an nfl team or an ncaa coach, they don't want to reveal their trade secrets. >> seems to work best with basketball, from what i saw in the notes, but also football and it works for quarterbacks and safeties because those seem like, you know not to say that a lineman isn't smart, but it seems like a quarterback or a safety may have to make a lot more split decisions. i guess. i don't know.

>> yeah. just on your previous point, basketball appears to be the sweet spot for dan hill's craft. because think about it. there are fewer players making greater impact. and team chemistry is so important. baseball and football are a lot more -- and think of the helmet on guarding the face from being observed. >> that's what i was going to ask. how do they do the facial recognition with the helmet on? >> well dan hill spent some time and it was in the story with mike leach and his football team -- he was at texas tech at the time. but he's in their face so to speak on the sideline. he observes the interviews of players. probably even videos them off the court as well. so it's not just limited to game. it's -- it could be -- these days with football being year-round, it can be you know

24/7, 365. >> even in interviews one of the questions is what does your mother think of you. and then -- which, this is a whole freudian thing in my mind -- it's not what you say, it's your facial expressions as you describe what your mother thinks of you. this is out there, kevin, is it not? >> yeah. i think what i've heard is all the questionnaires whether it's the interview, they do at the nfl combine. that stuff is interpreted subjectively and differently by different people. it's not terribly useful. and so i think hill feels that he can cut through the b.s. of players being coached to answer a certain way. and that particular question really conjures up -- emits some emotions positive and negative about how the player feels about

himself. just to follow up on one of your other questions, you know jeff foster of the combine told me the quarterback is such a high stakes boom or bust analysis and investment. and that's why he feels hill's services might be beneficial for a team. not so much the combine itself. safety -- the nfl combine has reams and reams of data on all these positions over many years. he says those are the two toughest to predict. so he's crunched some numbers with dan hill and thinks that those might be the best for a club to maybe bring in his services. >> well, working on that other one with golf and bring the guy so he can try to figure out what's wrong. i know i need a shrink more than a coach. anyway, kevin, we appreciate it. very interesting. and i guess it's the future. but thank you. >> hey, really appreciate your

time. thanks. when we come back this morning's top stories as we count down to the new year. plus we're welcoming a special guest host this morning. a legend in the world of economics, on his way to the table. harvard's kent rogoff. more when "squawk box" returns.

an airasia flight goes missing. the plane losing contact between singapore. officials now saying it's likely at the bottom of the sea. stocks plunging tomorrow after a vote fails. it puts the country's much-needed bailout at risk. oil shock. crude prices getting a lift from fighting in libya. a fire at one of the opec

country's main terminals destroying two days of output. and that is soaking worries about supply as the second hour of "squawk box" begins right now. welcome back to "squawk box" this morning right here on cnbc first in business worldwide. i'm andrew ross sorkin with joe kernen. becky has the day off. our guest host ken rogoff is here with three trading days left in 2014 now up 13%. futures at this hour take a look. see how things are going on. looks like things are going to start the day -- actually now just a little bit up. >> in the headlines really everything is keying off this greece's international bailout could be in jeopardy after

lawmakers failed to elect a new president in a final round of voting. snap elections must now take place. i think this will be on the 25th. january 25th watch. that's the next time we can see turbulence. one prominent party is in favor of tearing up the country's bailout agreement and i don't know what that would mean for everything. their membership in the european union and everything. does it make sense for them to be in the eu at this point? >> they don't think it is. >> think about that. they have the same interest rates and the same currencies. maybe we'll talk to ken about that. he may have viewpoints there as well. sony's movie "the interview" with $1 million and another $2.8 million over the weekend.

and carl icahn's latest target crane maker manitowoc. how was that? >> that was good pronunciation. >> according to a set fine -- i'm sorry. s.e.c. fine he's taken a 77% stake saying the stock is undervalued. he plans to talk to management about separating the company's services. we're going to go overseas for a moment. back to the missing airplane. the hope fading sadly for rescue. we're joined from the airport in singapore this morning. martin, good morning. >> yes. hello. you're absolutely right. hope does seem to be fading. we are more than 36 hours now since last contact with airasia 8501. we have reports that day two of the search and rescue, that's

wrapped up. it's not extending into the night. in a word it's nothing. the head of search and rescue operations had this to say earlier today. >> translator: our evaluation of the coordinates we received suggest it is underwater. our presumption is the aircraft is under the sea. >> so a very direct blunt, and maybe even brutal assessment given the fact there was nothing conclusive in terms of evidence. the search is going to continue tomorrow. we understand. we have some reports that indonesia is now requesting assistance from the u.s. uk and also france for submersibles. these would be diving rigs to get down there and try to look for any signs of the missing flight 8501. and this is because indonesia is still a developing country. it doesn't have much in the way of equipment and technology or even for that matter expertise.

earlier today indonesia accepted stance from singapore which is going to be sending over a team of experts as well as detecters. detecters that are meant to help locate the emergency beacons from 8501. there haven't been any signals heard or noticed at all which is making a lot of people ask why. especially now it's well past 36 hours since we last heard from this aircraft shouldn't there have been some signal from the beacons or black boxes? the data recorders? but so far absolutely nothing. that's as much as we know right now, guys. >> okay martin. which is not a lot. really we -- it's amazing we've had that -- what is this? is this three in the past year? >> three in the past year. >> another developing story this morning, a greek ferry catching fire. the fire continues to burn.

the norman atlantic was sailing from greece to italy when it caught fire. the passengers on board are so hot their shoes are melting if they try to make it to lower decks. rough seas and winds are hampering the efforts. five people have died already. and there were reports of others that have been injured among the 478 passengers and crew. we have talked about ken rogoff. and i don't think legend is -- i mean you're a legendary chess player. so that was the first thing. you are now an economist as well. the economy picked up steam as we close out 2014. we started the year at contracting in the first quarter. things have picked up since then. let's talk about this with ken rogoff. our guest host this morning. ken is a professor of economics at harvard university. also the coauthor of "this time is different: eight centuries of

financial falling." all along and i alluded to the great debate. and i'm wondering neither side is going to be 100% right. but there was one side that said it was a slow recovery because of uncertainty for corporate managers because of obamacare and taxes and regulations. there was another side that said it was because this is a typical response to a financial crisis. some people look for a snapback because previous recessions have been caused by when the federal reserve raised rated too high. sometimes raised them high to break the back of inflation. then we had quick snapbacks. this time i think you saw it was fundamentally different and was going the take a long time. which it has. >> it's not different from other financial crisis. it hits a big part of the banking sector. that it's not just one thing. it's very typical. and the trajectory the u.s.

followed looks like a garden variety. of course uncertainty mattered. of course policy mattered. i think, though we have to bear in mind it could have been a lot worse. >> so many different facets to talk to you about with this in terms of the fed. you know, they've been -- they've both been credited with saving us and also with staying too long and maybe the risks are still ahead of us for this extraordinary policy. others have talked about not liking the $800 billion stimulus that we did, that it was a waste. and you would probably feel that we -- the fiscal stimulus was withdrawn way too early. >> yeah i mean they declared trajectory too early. they didn't believe it would be a garden variety recession. they thought the recovery would happen quicker. even the speed with which dodd-frank was kicking in with regulations. sort of thought everything was okay again, all clear. but i wouldn't blame it on any

one thing. there are a lot of things going on. >> the people that are now saying that you were right say nothing has changed with the regulatory backdrop or the tax backdrop. and here we are recovering. and they also say if it was just our own fault here in this country that europe would have done better. and europe and what has happened there as shown us it was a systemic global crisis. because europe didn't come back either. >> yeah. europe was not ready to take a hit like this. the eurozone was at work in progress. they were not ready to do this. and they're struggling. they just weren't ready to take uncertainty. i think even if that hadn't hit in europe we would have had a long one. the europe thing added a whole other level. >> you say it could have been much worse. i won't disagree with that. there are other who is think it could have been much better. and the question is could it have been much better? historically, are there examples you looked at when working on

your book and other research where there were policies and other things that people did that we didn't in this instance? >> it's hard to know for sure because this was global. so sweden did better. they recovered faster. >> because they did what? >> well you know they did a lot of structural reform in sweden. sop they started out with a huge government and they had the advantage of a lot of inefficiencies they could pull out of the system. canada which didn't have a financial crisis they did the same thing. we weren't in a position to do that. our government was already small. sweden allowed a bank to go under in a smoother way than we did. but a lot of things people have done things worse. >> people point to swedens health care system as -- and it's like if we only knew how to take care of rhode island then we could be sweden. it's not comparable is it? >> i think that there are ways

it could have been better but people who are back seat drivers, monday morning quarterbacks forget that there were risks all along the way. we didn't know if the european union was going to blow up. >> do we know now? >> well we didn't know along the way what other leg might drop. and so some of the policies that were criticized afterwards were being cautious. there were people who wanted to take bigger risk. it's a hard call. >> is a leg dropping a bigger event from a shoe dropping? that's a good mixed metaphor. i like that. >> it was maybe not a good amount of words. >> do you give more credit to the fed for whatever state of play we're in now? or do you give credit to our elected officials in washington for any of this? >> well the fed had more consistency. in washington at some point they reached paralysis, but bush deserves credit. he went out and did the big

stimulus even though it was completely against all his principles. obama did more. paulsen deserves credit. geithner deserves credit. the fed has sort of been post-crisis. >> and let me ask you one other hand. i don't know if she was a former colleague of yours, elizabeth warren. >> she was a former colleague. >> she wants to break up the bank. she thinks there's things that still need to be done. if you were to do that would that help or hurt the economy? >> i think it's not easy to do in the middle of a financial crisis. but i think certainly there's still a lot of moral hazard in the financial system coming especially from the big banks. but it's not a little tweak in order to deal with that. i do agree that something ought to be done over the long run. >> your review of -- whose book was that -- yeah. i want to read your entire -- i don't know if i'll read martin's

book but i want to read a review. as far as your concern, do we have a better than average chance of avoiding serious damage from the fed's balance sheet? or are the risks still unknown as to how it plays out with this exit? >> the risks are unknown. there just aren't many examples of this. but on the other hand we're in a risky situation. >> is it better than average that we dodge the bullet or have they pushed so much the risk curve out so far that there are bubbles in places that we're not even considering right now because of all this money? >> obviously there are bubbles in places we're not considering. the question is you know if it can collapse the economy. >> so you're open to us having a day of reckoning of some sort from this? >> well i mean there are risks around it obviously. we don't know. >> but at this point give a definitely the fed did more harm than good in your view. >> absolutely.

certainly post-crisis. >> we're going to continue this conversation. ken's sticking around for the rest of the program. when we return a snapshot of the biotech sector. and then we're going to talk to the biggest winners from wearable tech. and then much more from ken rogoff on his view of the world and where we're headed. we're back in a moment. stamps.com is the best. i don't have to leave my desk and get up and go to the post office anymore. [ male announcer ] with stamps.com you can print real u.s. postage for all your letters and packages. i have exactly the amount of postage i need, the instant i need it. can

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welcome back to "squawk box" this morning. as 2014 draws to a close, cnbc breaking out the 2015 playbook. we're looking at ways you can make money in the coming year. this hour is pharma and biotech. here's meg tirrell. >> if you wanted growth in 2014 you almost had to be in biotech and pharma. stocks in the sector continued their run returning almost double the s&p. first drug price wars. it may be the biggest threat to biopharma. so far it's come mostly from health insurance, doctors, and patient advocacy groups. we could see drug wars against makers themselves. keep an eye on hepatitis c where gilead will face new competition. second immunotherapy. new cancer drugs that harness the immune system to fight

cancer. 2015 will be the year it's investable in new ways. while two new companies join in the race to bring another kind of immunotherapy to market. third, drug deals. 2014 was a banner year for m&a and health care. bigger companies continue to look for growth. expect bioteches with promising products particularly in cancer and targets. >> meg joins us this morning. you got away with murder here because usually we not only have you do the predictions, but we tell everybody what your predictions were the year before. we don't know yet how this is going to work out.

eric you have anything you disagree with meg on there? >> i'll agree with two of her predictions. biotech out-performs the s&p 500 for the sixth consecutive year in 2015. for companies now for 20 years. we just don't see any payer being incentivized on pricing. it's too lucrative a market for biotech companies. >> meg, you made that prediction. >> monday of last week the gilead news came out. so this was excluded from the largest formulary. we are seeing those increased pressures. and our third came from a

potential biotech. so eric has -- i always defer to eric on what he thinks about these things. some of the pressures i think is going to be still one of the biggest pressures on valuations next year. >> eric on the mergers and acquisitions front, so many of the transactions this year were drin by taxes and what appears to be the inversion craze that i think is over at this point. does that mean we see a slowdown? and to the extent we see more of it. you want to name some names? >> i'd be happy to take a crack at it. you always have a need in biopharma. they're always out there looking. although there aren't enough successful mid-cap names, those will be successful to sell. there have been four or five largish. we think 2015 will be fairly

steady. some of the names meg mentioned, i'll throw back to her. she's the best. they will be on anybody's list. >> i know you've done a lot of work in immunotherapy. seeing how much that stock has risen since then it's such a hot area. is there the opportunity for these names to potentially be takeout targets? >> well they've been well received by the public markets. no doubt about it. so i think they're off to a great start. my own hope as a biotech analyst is they maintain their premium valuations and are preserved as too expensive so they can continue to be publicly traded. i think 2015 is going to be a great year for expanding some of these therapies you mentioned. liquid tumors into more solid tumor types. we're anxious to see what comes

out in the next 12 months. >> do you think we've got any of these kind of catalyst events like we saw last year do you see any huge potential upside or downside? >> one of the particular events of next year is going to be what happened with puma. and there's no fda approval upcoming. it's just whether or not they do get acquired. it's very well known that they're out there seeking a buyer. and i think the stock is somewhat supported because of that. pbyi is theic er icticker. >> thank you. thank you for your predictions. we'll see you more and also in a year from now to see where that lands. coming up an energized view of the new year.

brent crude dropping now do 50% since january. we're going to drill down on the forecast for 2015. but first as we head to break, here's a snapshot of our predictions for the new year. >> i do think uber has big problems they're going to be facing in 2015. we've seen some road blocks that have been put up for their growth. >> uber has got a lot of potential over the next couple of years particularly on international expansion. >> people use it as a kind of a protest against existing forms of transportation. and as soon as the novelty wears off, that business had better be in good shape and know what the customer needs and deliver. >> if you're really going to disrupt a business you have to have a certain semblance or a level of confidence which can also be seen as arrogance to actually get there. >> i think that uber has proven it is not afraid of a legal fight and it is not afraid of disrupting. >> uber i think is different. i think uber's got a really

great money-making thing going on right now. >> here's my prediction on uber in 2015. i will hear a lot more about it because of andrew. >> i love uber. whether they're able to get through the regulatory hurdles. whether the steady march of technology overcomes the pushback from those that are going to be hurt. >> it's a game changer. >> if uber's a winner, there are losers.

coming up when we return it's one of the biggest business story of the year. wti down now more than 43%. we're going to ask what's really driving the drop. we'll talk about that and more when "squawk box" returns.

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welcome back to "squawk box" this morning. in the headlines, apple pay could be making its way overseas. reports out of britain say that

apple is talking to the country's biggest banks about introducing the payment service there. i was just using it and it's pretty cool. the new york stock exchange may be up for sale. the paper saying the big board's owners intercontinental exchange looking for some time in 2015. we're talking about the building here right? the actual place. >> it would include the building. >> yeah then the question is what happens to it all. the final installment of "the hobbit" topping the weekend box office. doing just a little bit better than the than "the interview". that made what $18 million over the weekend? that's sort of the reverse of what you normally see. >> but it cost $80 million to make and market.

>> we will see what happens to that movie. let's get an update on the missing air flight. katy tur joins us with more on that. katy? >> hey there. you can see how the weather is starting to get bad out here. the wind is picking up. they're expecting a lot of rain in the next few days. it's monsoon season here in southeast asia. right now they're looking at an area around the belatung islands. four countries are assisting in the search. it's being led by indonesia. malaysia is helping singapore and australia is also helping. they sent a maritime patrol aircraft. weather was certainly a factor two days ago now during that flight plp flight. the pilot called the control tower and asked to go to 38,000 feet because of severe storms in the area. what's confusing is there were a

number of other planes in the same flight path that didn't seem to have a problem with the weather. the search has stopped for the evening because it is dark. no word on how they'll be able to do it if the weather gets bad enough they have to suspend it or delay it at times. right now the indonesian authorities are not holding out much hope. they're saying they believe that the plane is probably somewhere in the java sea. they say that they don't know this for sure but that's what their calculations are saying. they're trying to prepare people for the worst case scenario. if it did manage to land on land or crash on land they are holding out hope for survivors. it is still a search and rescue operation. but as the hours tick by and as the days go on, it's starting to look worse and worse. andrew? >> oh boy. well, thank you for that report katy. we appreciate it. and we hope the news isn't sboodsas bad as we all think. >> you heard andrew a lot of other plane ossen the same

flight path with the same weather. you talk about all the flights a day in this country. that's why it's -- >> it's a miracle every day. >> when something happens, something happens. i don't know what is the difference between the last -- you know the three that -- and it's something specific i guess. i don't know. but i don't know what makes it something in the weather that doesn't normally happen maybe it's just a chance or a probability one in a whatever of lightning hitting something or whatever. >> oftentimes pilot error. combined pilot time in the air is not nearly as much as some of the other pilots. >> safety of the way it's maintained in different parts of the world. and with parts and maintenance and everything pems we're going to change gears now. time for your monday morning trading block. joining us on oil is steven schork. also boris schlossberg. i was giving you grief at $70 or $75 and i think you called that

the low. didn't you? i mean did you ever get on board with this trade? >> yeah. i mean first of all i don't call bottoms or tops. i absolutely was on and i thought it was going to hold at $70. and what happens? it breaks the area where you think it's going to hold and then you have to jump on board. yeah. we've been short since $67. that is, that i'm short. i'm long calls to protect in case of a rebound. but this trade's only going in one direction at this time. you can only play it from one direction. over the last two weeks, interest trade on the 30 dollar put. a bet that it will go $30 by june traded 36,000 contracts

over the past two weeks. so there was a considerable amount of belief that we are going lower. so are we at the low now? who knows. this is what i call we are in the stupid range. we knew oil at $130 but high prices became the reason for higher prices as momentum increases. it's the same thing now in reverse. low prices are the reason for low prices. you can attracting a tremendous amount of trade, a tremendous amount of money chasing these markets down lower now. so bottom line we don't know how much lower we can go. but certainly i don't want to be buying it at this level. >> i can't believe the 30 puts are ever going to be in the money. how much are they -- i'll sell you a few of those. how much will you give me? is it a dollar? >> yeah. it's right around a dollar a barrel.

that contract expires in about three weeks. that open interest has dropped over 400% in the last two weeks. you're getting bets on oil will be below $40 a barrel by january 20th. it's an amazing event right now, absolutely. >> think of the money you could have made at $95 just on a 70 put or a 65 put. and probably thousands of percent gains. right? >> i had clients who wanted to sell the 90 puts and that was the first. once you broke 90 i mean this market trades in buckets or in steps. so 75 to 70 again, was my drop dead number. and at 70 it makes no sense at this point. when you look at it joe, demand is still going to be far below supply at this point. we've had more than a 56% cut in

energy prices over the past six months in the iea still continues to lower global demand growth. what does this tell us about the global economy in general? things here in the u.s. look great, but i don't know about beyond our borders. >> boris -- >> i think you just jinxed the oil trade. you said i'm going to sell you 30 puts so that means we're probably going there. >> you know what? people say when i jumped off the bengals bandwagon they're going to the super bowl. i'm very comfortable off the bengals bandwagon. i think they got beat 80-0 the last time they played the colts. so i'm fine. you want to buy some puts? i'll give you some puts. >> i'll stay out of that market. i don't want to be a tourist in that market. >> okay. are you in the currency market? are you a resident? >> i am a resident. i tell you something very interesting that is sort of peripheral to this. if oil stays lower, i said to you russia just is in very very

serious trouble. if oil just stays low, that we had a bounce in the ruble. if but if you have this oil staying at 50 for a year it's going to create tremendous pressure over there. one of the interesting things you're seeing a capital flow out of russia. we talked about the 120 trade where euro goes to 1.20 yen goes to 120. and swiss holding the 120 floor. this has been the single most successful in history. but the last week they went to negative rates and euro still remains close to 1 bnt -- 1.20. that thing breaks you could have a quick move down to 1.18 as the central bank basically fails. >> when do we go? the one place that's not

breaking is where we're going, davos. >> exactly. you go to davos, it's going to get more expensive for you. >> exactly. because of the stupid central bank over there. it might break, though right? >> that would be absolutely karmic if it does. when the market does not react, they went to negative interest rates and came back down to 1.20. it tells me there's a lot of paem that want to sell this thing below the floor. and if that floor goes that's going to be an interesting trade. >> don't worry about it. yeah. we're fine. no, i try to save the company money, andrew. >> i'm always trying to keep it very tight. >> yes. so am i. watch every p & q. always. thank you. thank you, stephen. i think that whole swiss, that's fascinating. they've defended the currency

better than anyone else. >> although their reserves go up and up and up. they're at 70% of gdp now. >> it's amazing. i knew you'd like that. you're very -- >> he's going to be over there too. >> you going to davos? >> i'm going. >> you're going to come on the show over there. >> sure. >> really? because it's not as early. it's 12:00 to 3:00 other there. you can get up by 12:00. you won't be at the russian -- see between the caviar and the vodka, if you roll in at 12:00, we're lucky. and supermodels. when we return "squawk box" will be back. why wearable teches are set to take off when which companies are poised to take off immediately. here are some of the big things to come in wearables in the new year. we're back in just a moment. >> no i am not going to buy the apple watch. that's no comment on apple. that's no comment on the watch. that's a comment on me. >> i'm excited about the apple watch. >> ultimately 2015 will depend

on whether or not the year that wearables becomes a big category. i suspect we're still a couple years away from that. >> i suspect a lot of people will buy the watch. i think this is going to be a hot fashion accessory. >> i think people get emotional about apple and so this time next year people might be a little bit more toward the fear end instead of the greed end on the stock. >> i think the watch is going to have a battery issue. >> i already have mine picked out. it's going to be the pink let e one. >> i proudly wear my jawbone up. i'm waiting for the three. >> the tracking of your sleep, how much did i eat, how much steps did i step? oh my gosh. [ laughs ] -i'm flo! -i know! i'm going to get you your rental car. this is so ridiculous. we're going to manage your entire repair process from paperwork to pickup, okay little tiny baby? your car is ready, and your repairs are guaranteed for as long as you own it. the progressive service center -- a real place, where we really manage your claim from start to finish.

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welcome back to "squawk box" this morning. 2015 could be the year that wearable technology becomes an important hardware category. as we embark on the next 12 months does the information tech sector deserve more love? our next guest says yes. good morning to you. >> good morning, andrew. >> let's talk about some of these companies that will benefit from wearables. i am a big fan of jawbone though it just broke so i'm not wearing it today. who are the winners when you think about the wearables

category and let's just stipulate up front -- let me ask you up front, do you actually think that wearables will be that big this year given that things like google glass have not taken off? we don't know where the apple watch is going to be. fitbit jawbone, all of those things they've been taken up by a certain group of people but it's unclear if they're really for the masses yet. >> basically what we're looking for in 2015 is the number of wearables shipped globally to double from this year. so this year we're looking for about 20 million units shipped and next year we expect that to double. and then we expect it to double as well in 2016. not surprisingly we expect those volumes to be driven by the apple watch. we're looking for that product to become available in the spring of next year. but in addition we look for a number of companies to make inroads in this category. and it's not just the products

themselves. it's kind of the infrastructure and innards of these devices that will also benefit to a large extent. >> okay. so one thing first on the apple watch, you said 20 million wearables this year. that's the 2015 calendar year. you say that doubles. how much of that is apple in 2015? there's no question it's going to be a big percentage of that. we haven't put a number or a percentage representing apple within that construct. >> you think they're selling 5 million watches or 25 million watches? >> well, i think it's fair to say we could be in the middle of that. i think what's important to understand is apple is going to be the leader in this category to our estimation. but there are other companies participating. whether you're looking at samsung, google, broadcom, or qualcomm. if you look at google and qualcomm, both of those names have underperformed significantly in 2014 and we

think in part due to wearables we see a recovery in those names for next year. >> scott, call me crazy, but google -- there are google watches already. motorola makes one. there are many of these watches and none of them have been a success. samsung makes them. it's hard to suggest that something that exists today as a failure is going to be a massive success in the new year. how do you square that? >> well, so first of all, the apple watch hasn't become available yet. i think it's fair to say that at the least there's a tremendous amount of interest in that. we look for the apple watch to be the catalyst for the wearables category at large. and so i don't dispute the fact that right now it seems it's a niche category. one of the things we're predicting is for next year it's going to go from niche to more mainstream. that's going to really have i think a notable beneficial

impact on a number of companies. >> how far away are we from the idea that my wearable will decide i'm warmer than i normally am and when i walk into my house it's going to communicate with my nest thermostat or one of these things and it's going to cool the house down in advance? i mean when people talk about the future they think some of these wearables will do things of that sort. they'll turn the lights on or off because they know what time it is. it's your key. you'll have apple pay. it'll be your credit card. all of these things. are we talking five years out or 12 months out? >> well i think it's less than five years out without question. the interesting aspect to that is i think from the user perspective while the capability is there, one needs to think about how much we want to enable our machines to decide and take actions on our behalf. and i think that's one of the big questions that comes up with

respect to wearables and increasingly artificial intelligence. but those types of things will definitely be possible sooner rather than later. >> you haven't been warned enough? stephen hawking and others? you saw 2001 right? you remember how hal decided to gauge the temperature of the people that were asleep? remember what he did to them? he turned off their oxygen. i mean do you want -- >> i understand. i just have seen the future. >> lip reading is big now. >> like when i'm talking to you down here. i go like this. >> nobody can hear you. >> no. but that was from 2001. >> and it's here now. that's the new -- >> it's a slippery slope. ask scott. it's a slippery slope. if you let machines start controlling everything. >> i will make you a bet zbp did you see watson? what he did to the jeopardy contestants? you're worried, aren't you?

have you had your ass kicked by a computer on chess yet? >> artificial intelligence and how it works scares me. it's a huge adjustment. >> i agree. we think alike. >> joe, what are you going to do when comcast and you get your insurance benefits. they'll say if you wear one of these bands you'll get a discount. like saying you're not a smoker. will you do that? >> that's a different area. i trust comcast. i do not trust machines. that's my only point. >> scott, thank you. >> thanks guys. happy holidays. coming up -- have you been beaten by a program at chess? >> i actually don't play them. >> why don't you try that? there are some really good ones. >> they would slaughter me. i think even if the best player can win one out of ten, that

would be good. >> we have to go to break, but you've seen the notion that the singularity could come in our lifetime, right? >> yeah. it has a certain logic to it where the machines is the last frontiers frontiers. >> if machine knowledge becomes a billion times all human knowledge put together we have no idea what is possible at that point, do we? >> i agree. i don't know how to think about it. when i think about my children and their future i think that's an issue. >> i want to be an avatar on a grid that can live for as long as i want. >> okay. coming up -- he doesn't seem optimistic -- much more from our guest host ken rogoff. i mean you fly around. use your tail to have -- i think that's the way they mate too. did you see that movie? >> i saw the movie, yeah. >> the tail is important. later if you can buy one social media stock before the end of the year what would you buy? analyst mark mehaney makes his

pick in the next hour.

let's take a look at some stocks to watch this morning. carl icahn taking a 7.7% stake in manitowoc which means where the spirit lives. i looked that up. there's nothing too irrelevant or trivial. the billionaire investor says the crane maker is undervalued. he plans to talk to management about separating its crane and

food service into two separate businesses. and bhp and other mining stocks are rising this morning. this follows recent weeks of declining in metals prices. you get a lot on year end and beginning of the year. sort of adjust portfolios. we'll see what happens. it should be interesting. coming up, a live report from singapore. we'll have a look at what may prove to be the deadliest year in air travel in nearly a decade. but really kind of not in our country. the biggest stock movers of 2014 and how they could perform in the new year. take a look at u.s. equity futures. sound like a sure thing but i'm a bit skeptical of sure things. why's that? look what daddy's got... ahhhhhhhhhh!!!!! growth you can count on from the bank where no branches equals great rates.

another aviation tragedy. an airasia plane goes missing. we'll bring the latest. "the hobbit" takes the top box office spot this weekend but "the interview" takeing online rentals and purchases. we'll have investment ideas.

get your portfolio ready. >> happy new year everybody! >> the third hour of "squawk box" starts right now. ♪ welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with andrew ross sorkin. becky quick is off today. our guest host today professor ken rogoff. we want to talk to him about oil prices as well. but first andrew has the top stories. >> it's a holiday shortened trading week. we are expecting tomorrow we're going to get the latest case shiller home price index. also consumer confidence in december. an wednesday we'll get jobless claims. november pending home sales. markets closed on thursday for new year's day. here's a look at equity futures

for now. dow looks like it would open off about 22 points. nasdaq down about 7.5 points. much of this may be a function of a couple different things. one of which is that we're watching the price of oil. clashes in libya stoking worries about supply from the opec member. a fire started at one of the export terminals has destroyed 800,000 barrels of crude. take a look at stocks in greece. here's one of the big worries. competing party in parliament failuring to elect. could win a majority in the general election to put the bailout in jeopardy. look at major european indexes at this hour. all trading off that news. >> and the world still does have credit default swaps and the greek credit default swaps are

now at post financial crisis highs. and i think yeeltds are back much more. we were gratified by how low yields in grease had dropped. now those are going back up too. this is something to keep an eye on. i'd say the lead story for business today. general news probably this. let's go to singapore now for an update on the missing airasia plane that is now presumed to have crashed and be on the bottom of the sea. martin soong joins us again with more. hello again, martin. >> hello and good morning. we are now -- it is coming to 38 hours since we last heard from airasia 8501. we have reports that day two of the search and rescue operation, the air portion at least has now been terminated for today. we assume it's going to continue

tomorrow. the net result so far in a word is nothing. earlier today the head of search and rescue operations for indonesia which is leading this effort had this grim assessment. >> translator: our evaluation of the coordinates we received suggested it is underwater so our prujs is the aircraft is under the sea. it can be expanded based on evaluation. >> so direct brutal and perhaps premature. because nothing definitive or substantive in terms of what happened to the 162 passengers as well as crew on board 8501 or the aircraft itself. interesting tomorrow though when the search resumes the scope and the area of the search is going to broaden or expand. it's not going to be just a waterborne search.

between surabaya and singapore where it was supposed to have landed but obviously didn't. now they are also going to cover land masses near that area. that's one interesting point. the other thing is airasia is thinking of asking u.s. uk and france for submersibles to get into the ocean. the ocean floor in the area where they're searching deepens. about 50 meters or 150 feet. so should theoretically be assessable to these deep dive rigs. indonesia is still a developing country. so does not have this kind of technology. so it's asked for assistance from countries like the u.s. the uk and france as well. so earlier today it also requested for and was agreed to by singapore they were going to get detecters that allow them to go upside water to look for

these emergency beacons. so far no signs, no sounds, no signals from these beacons yet or the black boxes. that remains a mystery of 8501. why after close to 40 hours since we last heard from this aircraft no signals, no sign from any of the beacons, guys. >> okay. martin, thank you for that report. for more on the missing airasia flight and deadly year for global air travel we're joined by aviation chairman michael boyd. thank you for joining us. hard to explain what's going on here. much of the world has had no fatal accidents and yet when you look at what's happened specifically in asia we now have three different incidents all seem to be different. but is there something we need to know? >> i don't think so. still a safe way of going.

one airplane shot down. we didn't do much about that. another airplane disappeared. and this one, i think this is a one off episodic event where something happened to an airplane caused by weather. and there's not much we can do about it. but it doesn't change the fact air travel is the safest way to go. >> when people talk about weather being the issue, is it weather that's the issue or pilot error that becomes the issue? >> well it depends. it's what the pilot saw or didn't see. we have had incidents in history where an airplane has been torn apart in the sky just with clear weather with turbulence. it could happen in bad weather. not very often, but pilots the radar says maybe he didn't see something. maybe there was a catastrophic failure on the part of the airplane. we really don't know. and we may ner know. i suspect if they found the black boxes which they will then we'll know more. >> does it make sense to you when we hear news that they

asked to increase the height at which they were flying to get away from -- does that make sense to you? we also know lots of other planes apparently went through this same weather pattern and obviously landed safely. >> yeah. there's 12 to 14 flights a day between singapore and surabaya. it's not an unknown route. weather like this is common there. so the request to climb higher apparently he requested that they said hold off there might be an airplane in the middle of that. by the time he got back he was gone. but that's common. saying divert or another altitude. >> how deep is the water there? >> i understand it's something 150 to 200 feet. no more than that. kind of like long island sound. so i mean, that would indicate to me that finding big pieces of machinery such as an airplane is something when the weather calms down they're going to be able to do. >> there's been a long-running debate about whether planes

should effectively be streaming their black box at all times to some place so we don't have to wait. so you can find this information very quickly. airlines have long said it's cost prohibitive. is there a time it won't be cost prohibitive and make sense we should be doing that? >> as long as -- first of all, we haven't needed it until very leently. we had air france five years ago. whe malaysia 370. that run this table of not finding airplanes. but if it can be done very inexpensively, why not? i think it will happen eventually. no question about it. >> okay. michael, we are going to leave it there. we appreciate your time this morning. >> thank you. coming up when we return what to expect from the markets in 2015. and then price hikes at u.p.s. happening today. we'll talk winners and losers in shipping. app lot of them to speak about regarding the holidays. then at 8:30 a.m. eastern time portfolio picks that could make

you a bit of money in the new year. ben kerby is going to join us. and later mark mahaney is going to join us. and of course ken rogoff our guest host. we're back in just a moment.

welcome back to "squawk box" this morning. take a look at the futures. dow jones looks like it would open 24 points down. s&p 500 off about 3.5 points. nasdaq would open down about nine points. in large part perhaps a function of what's going on in greece maybe some oil issues as well. let's tell you about some of the other stories we're watching this morning. "the hobbit" taking the top spot at the box office this weekend. much of the controversy has been around "the interview." that movie was streamed or downloaded bringing more than $15 million in gross revenue. now the total is nearly $18 million. that's the good news. also apple deciding to make the film available in its itunes store starting yesterday. so that number should go up. but the number to beat what did we say they need to make $75 million in total? >> not to mention the collateral

damage. >> you saw that there are factions in pakistan that are really unhappy with "homeland." >> yes. i saw that. >> i'm almost up to speed. we have one to go. >> this was a great season. >> it was great. i don't know how they repeat this. but i can see why pakistan -- and pakistan i don't know, we have this weird frenimy status. >> they made it clear this thing is more than just -- >> and i think that could have -- i don't know. north korea, there's no love loss there from the start. but pakistan thing was -- i was just thinking about it last night in light of "the interview" that this was serious. because they were fully on board. did you see the ten minute part? give them ten minutes. everyone got killed. if you haven't seen it never

mind. just a tv show. andrew has a show coming on showtime. >> i wrote a tv drama. but we're doing just a pilot. >> how can we not tell him? the false modesty getting old. go ahead. >> thank you. variety releasing a list of most pirated move eies of 2014. "wolf of wall street" and then "frozen." this year' "robocop" reboot was third. then "gravity" with george clooney and sandra bullock. >> you told me that matthew mcconaughey was not star worthy.

and then i saw "interstellar" and loved it. now you like it. >> no no no. we were talking about matthew mcconaughey. i was saying before he took on the "true detective" role he hadn't had his star turn in "the dallas buyers club." so his career sort of had a complete reboot and took off in this amazing way. >> but there was a little bit of -- you had to have a bit of disbelief with "interstellar." when he falls from somewhere and is in a room with a bunch of files. >> don't tell anyone. >> it's been out for months. >> i was late to the game. >> it's not a ben affleck movie you see on opening night. or george clooney. the dow crossing into new territory hitting 18,000 last week and up 9%. joining us now on what we should expect in 2015 on the economy is lindsey. you made our year-end tape on

friday. >> i saw that. struggling with the last name. it is a tough last name. >> no. if you knew just say it exactly how it looks. it works. and also yuri timer. and our guest host this morning continues. harvard professor ken rogoff. i'll start with you to get the market stuff out of the way. earlier i asked let me guess high single digits for 2015. he said 20%. you're a high single digits guy, aren't you for next year? >> yeah. i think the consensus i would look for next year was what it was the beginning of this year. rates are going to go up and stocks are going to do well. pes have expanded. it's been a pretty narrow leadership this year. it's been mostly large caps. and everything else is basically

lagged. we're in that mode where you look at earnings growth of 7% or 8%. you don't really get much multiple expansion maybe. and you are in a single high digit mode. maybe it's better if we get some pe expansion. unfortunately i'm in the consensus there. >> but do you think it will be you know an easy to watch 8% or 9% or could we be down part of the year or up double digits for part of the year versus 2014 and then just end up single digits? >> i think usually around the start of the fed rate cycle you do some some volatility. if the fed is going to start mid-year and that's really all we know and we don't know that for sure. the fed has signalled they're going to start mid-year. the big question is how fast do they go? do they go once and then stop for three months. so around that time we will see some volatility. i think 2015 will be a more

volatile year. ff it stretches up double digits, i think we'll probably see a bit of everything. i think the bigger question for asset allocator is u.s. versus non-u.s., investment grade versus high yield. those are the questions rather than do stock gos up and down. >> lindsey, if you were to rank things in importance for watching next year talk about greece. or in light of europe greece today is on our radar. but then we have lower oil prices. we had a 5% print on gdp. how would you rank all of those things? >> i think the number one issue is going to be the domestic labor market and whether or not we can see it translate into income growth as we turn the corner into the new year. of course, just commenting on what the previous guest said about the midterm of 2015 possibly being the appropriate timing for rate increases.

that is based on the expectation of 3% gdp as far as the eye can see. continued improvement in the labor market and reversal of inflation back towards 2%. but that's very optimistic. we did have very impressive growth in the second and third quarter. but as we round out the year there was a clear loss of momentum in manufacturing, investment particularly the energy sector. slower government spending less of an inventory build. and of course if you add in the sluggish housing market and as i mentioned minimal wage pressures, there really is no pressure for the fed to raise rates in the near term as we are expecting more of the same in terms of activity levels right around 2% for 2015. >> you want to comment on what we heard from either guest? >> well at first i think they'll be cautious on raises rates because it's just so much worse in a recession. but i must say about the stock prices going up i can't. but there's a disconnect between

people like my friend larry summers who talks about stagnation and interest rates being low. and here showing exactly the opposite. i tend to think we're not in secular stagnation. that we're just coming out of this financial crisis. and that growth will be -- >> but we're at 18,000. >> the levels i'm talking about the real economy where there's really this debate. >> right. lindsey, we have now gotten to talk about consumers more than corporations for some reason. do we need corporations to start investing in long-term projects and capital? i mean don't we need the corporations to improve the labor market you're talking about? i mean it's not just consumers. >> oh no. certainly. i think that has been the missing link for the past several years. we have not seen that market investment that we need on the

business side investing in growing, taking out new employees. that's where we see that drawdown in terms of that pool of available labor that will put pressure on wages. but right now businesses are still rezhesitant to invest. because the recovery is uneven they're investing in part-time temporary and low wage hires. so we're not seeing that double digit growth in terms of business spending that you would expect four-plus years into the recovery. >> but you said wages are going to improve, didn't you? >> oh, wages could improve. if we begin to see that investment. but right now you're still talking about stagnant wage growth at 1.9% since the end of the recession. and that is continuing to keep the fed at bay. so we have taken steps in the right direction, but certainly not talking about any type of

markedly impressive wage growth at this point. >> we'll leave it there. jurrien, anything you've got to say or no? >> i do agree with lindsey that that threshold of where unemployment starts to trigger wage inflation is what everybody is solving for in the next year or two. >> thanks. coming up major shippers learning from last year's mistakes. they avoided holiday delays. shipping wars next. and then ben kerby with investment ideas that could make you money in the new year. all that when we return.

u.p.s. is upping its prices today. moving to a system based on package size rather than weight. fed exis also going to be raising prices this week i think based on a similar metric. don braden, good morning to you. >> good morning. >> help us understand what this all means. if u.p.s. is going to change it so weight no longer matters? it's just the size of the box. is that going to change the way -- for example, amazon will send me a product in a box that's -- >> with a bunch of pillows of air. >> exactly. >> you've hit on something here. they're not really actually trying to raise price. they're not trying to raise

yield although that is the way it's been widely perceived. both u.p.s. and fedex are putting in dimensional weight pricing metrics because they want to eliminate all that air. if you look at the trailers that move up and down the highways and biways look at the freight that goes into an airplane for fedex and u.p.s. they reach the amount of cubicle space long before they weigh out. in 100% of their loads. they are cubing out before they weigh out. if they could reduce the amount of those pillows of air by 10%, 20 20%, they increase their line haul capacity by 10%, 20%. that's what they're striving for here is to make the system more efficient by driving better shipping packing behavior. not necessarily the yield. >> so what about weight? does weight matter at all? >> weight matters. if it weighs enough that without

the pillows of air, then you'll get charged by the weight. it's just they don't want to shipping all those pillows of air. >> but then talk through the implications for all of the big retailers that ship. are they going to be changing -- i mean does this have a domino effect into the card board industry and everybody else? the folks who actually make the air? >> it does. but i will tell you this. it's really great news for everyone. you go back five six years ago, procter & gamble were going to reduce by 20%. it's great for the environment and shipping. this is great news, it's just one of the ways you attack it. it's the free market at work. if you charge more for it people will find a way to reduce their costs. >> if you were going to buy fedex or u.p.s. which would you buy? >> we'd be buying fedex.

we continue to see that as the more entrepreneurial company. u.p.s. did not have as egregious of service issues as last year. but i have a u.p.s. package, i know this is a sample size of one. but u.p.s. sent on the 15th of december sent a package from rhode island here to missouri and then on to vegas, colorado, and then finally back here. it may get delivered now they're telling me today. so that's a miss on them. >> don, thank you. happy holidays. >> same to you. >> glad that package is getting to the right place. >> weapon need both obviously. you've had both. right? fedex and u.p.s. bringing stuff to the sorkin house. i don't think one -- at least at my house we need two shipping. coming up portfolio picks from a four-star rated fund.

opportunities in energy telecom, and financial services. first, though morgan brennan is going to break down the biggest stock winners from 2014. hey, morgan. >> hey guys. it's been another solid year for stocks. looking at the russell 1000 the largest stocks we have seven that made triple digit gains this year. we'll have that list when "squawk box" returns. the holiday season is here, which means it's time for the volkswagen sign-then-drive event. for practically just your signature, you could drive home for the holidays in a german-engineered volkswagen. like the sporty, advanced new jetta... and the 2015 motor trend car of the year all-new golf. if you're wishing for a new volkswagen this season... just about all you need is a finely tuned... pen. hurry in to the sign then drive event and get a five-hundred dollar

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welcome back to "squawk box." here's what's making headlines this morning. sony users of the playstation network still dealing with connectivity problems. but the company says it's beginning to be restored. also twitter the good news back online after a three-hour outage yesterday. google's gmail has been blocked for some in china and censorship groups saying the government is trying to eliminate google's presence in china. google would only say there's nothing technically wrong on its end. so we will try to find out more about what's happening on the

other end. if that's the case. joe? >> very sad. not that. you go to build-a-bear and your kid buys a -- builds a dog. he wants a dog andrew. he wants a dog. you go to build-a-bear -- let me talk about this. when we go to break -- >> he had a fire coat. we got a whole costume. >> when we go to break, we'll talk. he's crying out for a pet, andrew. you know? zillow just out with its -- >> he's scared of real dogs. >> is he really? then you got to get one. ranking of celebrity neighbors. zillow has a ranking of celebrity neighbors. i didn't know they had one. for the second year in a row, americans would most like to live next to nbc's own jimmy fallon. that's cute. he was the most popular among people with kids. the least desirable neighbor justin bieber. he tps his neighbors houses. did he throw tomatoes or

something? >> eggs. he eggs the house. >> there's like smoke coming -- if you're not in colorado you're in trouble. and the pop star getting the most worst neighbor votes in the history of zillow's survey. >> did you see what he tweeted over the weekend? >> no. >> what he gave himself for christmas. a plane. >> oh really? >> he gave himself a plane. >> see, it's hard for me to hate a guy who has a jet. you know? easy to hate. >> did you see there was a story about what a selfie is when you're wealthy? it's a wealfie or something? >> you don't send out selfies? i only did once and that was when we went on a date. we went to the premiere of "boardwalk empire." we went together and met a bunch of celebrities and stuff. >> took some pictures. selfies and wealfies.

as the year draws to a close, we're looking back at some of the biggest stock movers of 2014. morgan brennan joins us now with more. >> hey andrew. it's been another strong year for stocks. looking at the russell 1000. 18 have surged up than 18%. take squakywork solutions. up 161% on strong demand for apple devices which it provides chips for. after october's broad semiconductor selloff, it's rallies on managements boosted outlook. another winner to take a look at intercept pharmaceuticals. this is the company that ended its liver treatment trial earlier because of better than expected results. up by on the news. it's still up about 128% for

this year. airline stocks also bigger. 123% for 2014. and american airlines also doubled up more than a hundred percent. semiconducts pharma airlines have vastly outperformed the broader market this year. on the flip side some of the biggest laggards this year that's as crude oil as lost more than 40% of its value since june. we're going to dig into that lais of losers later this morning on "squawk alley." skyworks intercept, and airline companies like southwest and american all big winners this year. >> okay. thank you for that. joining us now with what to expect for 2015 ben kerby. portfolio manager of the almost $19 billion thornburg income

builder. income combined with growth or more income? >> for the thornburg income investment builder, income comes first. we want a portfolio of companies with the willingness to pay dividends and with the ability to increase those dif dends per share over time. so capital appreciation for us is a secondary goal. and we scour the world from the bottoms up basis to try to find the most attractive income generating opportunities both in stocks and in bonds. >> there was a time when that was fashionable to find companies that would be able to increase their dividend because anything else is like a greater here. you have to find somebody willing to buy it on an earnings stream that may not be paid out. it makes sense but it's not

fashionable. we just said you're going give us some hot stocks. it's hard to find hot stocks that pay a high dividend. >> yeah that's fair. you know it's not very fashionable but we have increased our dividend per share. from 50 cents in 2003 to a dollar today. so we've doubled it. and our return's been about 10% over that time as well. a few stocks we like there are some interesting opportunities. i think to quote yogi berra, you have to be selective and bottoms up to find good opportunities today. the stock prices are low. we're still in an artificial environment with interest rates near zero. >> so give me some. >> so one name that we like is canadian oil sands. so this is a canadian operator of the oil sands.

and they have a 37% stake of this crude in canada. what's interesting about this stock is really the valuation. i'm not trying to call a bottom on o'oil price and i'm not smart enough to do that. i'm not going to try to do that. but i think we're being paid to take the risk today in this stock. so over the last ten years, this company has averaged a price to book of about three times. today it's at 1.5 times and the global financial crisis at 2.1 times. so 30% below the global financial crisis valuation for this company. if and when oil gets back to 9200 which we think it will we don't know when this company probably pays in dividends and the stock price probably is closer to 20 than the current 11 where it is today. >> we actually vf not put the -- does it have -- we don't we have

a symbol for that anywhere? what is it? >> it trades in canada. the ticker is cos-cn. >> okay. good. then we saw about five of your other picks as well. just wondering we have some new graphics. i think that was just specific to that individual issue. we appreciate your time today. thank you. get that up to 20 billion. >> thank you. >> i mean, 19, it's close. with income stocks it could take awhile though. but we appreciate the less risk. >> conservative guy. >> little less risk with income generating than with the high fliers like juneau biotech or something. see that. it's up another three after meg was talking about it. >> we're going to talk high fliers next. do you know why? >> yeah. >> you think they're high fliers? >> social media stocks. they still are. >> for now. >> we had a discussion earlier today. that's one of our new year's resolution. >> to be more social?

>> no. but to be more savvy next year. >> savvy on social media. >> you need to help me. >> i need help from somebody. coming up predictions for social media. we're going to talk about advertising and whether it's going to be out-pacing traditional media. analyst mark mahaney joins us next with some of the answers. we're back in a moment. e company. stay with me. on thursday a hamster video goes online. on friday it goes viral - a network choking phenomenon. why do you care? he's on the same cloud as your business. the more hits he gets, the slower your business may get. do you want to share your cloud with a hamster? today there's a new way to work. and it'made with ibm.

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welcome back to "squawk box." got a bit of breaking news. intercontinental exchange is now denying a report that happened in "the new york times"the "new york post" over the weekend saying the new york stock exchange might be for sale. in the article it is for sale is untrue, it is in conflict with recent statements about integrating and investing in the new york stock exchange. >> i'm shocked "the new york post" would run something -- >> right from the horsey's mouth right there. >> maybe when they had the wrong guys for the marathon bombing -- >> we talked about the reputable newspapers. >> i said i read two unreputable newspapers on sunday. >> zukhe's not going to be happy

with you. >> weekend review it has -- >> i've heard of that paper. >> very reputable. >> it's the battle of the stocks. here to give us his take is lead internet analyst mark mahaney. good morning to you, mark. >> good morning, andrew. >> so let's go through 2015. what is going to happen? one of the questions we teased before the break was new ceo for twitter. is his job up for grabs? >> not yet. it could well be if they don't see an improvement in their use for and engagement growth. so the stock bearing back down to stocks. there's going to be a lot of pressure on the board. there's been plenty of other transitions in the management team. why not one more? >> right. lot of opportunity, though in the twitter stock if things were to turn around. then the question become ifs you

had a dollar to put into facebook or a dollar to put into twitter, what's the better bet? >> you know we'd put that in facebook. it's our number three pick for the year. one of the great advantages you have in facebook, valuation is reasonable. there's probably not a plot of multiple upside from here but you have 30% earnings growth. and then you've got new greenfield revenue opportunities in 2015. videos coming on strong. they've got this instagram asset that's just now starting to be monetized. we call those the four greenfields that are all coming live for facebook in '15. >> where do you put google in all this? >> yeah google is a buy for us. it's not one of our top picks, however. the one surprise we put o out a report on the top ten surprises for 2015 unlikely to happen but were it to happen and nobody's looking for it if they

were to return cash to shareholders, that would be the biggest catalyst in the space. we'd see that stock up a turn or two. >> other big surprises on your list amazon. your sense is that it might -- the margins might recover. this is the year to watch. >> yeah. this is probably our single biggest contrarian call. we think we're close to an inflection point in the markets where they can start recovering. there's a variety of issues in there including a recent data point. they've had 10 million new prime members sign on over the holiday break. with that price increase going into effect on prime, that's a lot of operating income they could invest or they could drop to the bottom line. so it's our number one pick. >> final prediction you say no major internet acquisitions actually occur. so yelp doesn't get acquired pandora, shutterfly, no aol

bought by the reverse. none of that happening in 2015? >> that would truly be a surprise if there were no acquisitions. we're seeing all this cash in the sector. you've got a dozen large cap strategic buyers in the group. it'd be very surprising if there wasn't some takeout just like we had this last year. some of them were public like priceline for open table. all of those are potential acquisition candidates. chances are the probability is that one of those will not be dependent by the end of 2015. >> thank you for gazing into your crystal ball and happy holidays. >> you too andrew. coming up much more from our guest ken rogoff. and pet care. some looking to become the air bnb for dogs.

have you heard of the new dialing procedure for for the 415 and 628 area codes? no what is it? starting february 21, 2015 if you have a 415 or 628 number you'll need to dial... 1 plus the area code plus the phone number for all calls. okay, but what if i have a 415 number, and i'm calling a 415 number? you'll still need to dial... 1 plus the area code plus the phone number. so when in doubt, dial it out!

i thought from reading the pre-interview that oil was on your mind as something very positive. we have had people. we've run the gamut from incredibly positive.

i don't know if we have had incredibly negative but we have certainly had more negative effects than positive. some have said that. i never have agreed with that. >> two different things. we are talking about the stock market and the global economy. it is a positive, europe, japan, a huge shot in the arm. in some sense, it is a zero. somebody is losing money russia, ven ezezuela, saudi arabia. in the united states, we are a big producer but sort of a redistribution. a huge shot in the arm. >> for some of the problems that long-term social problems, some of us think they take care of themselves. part of the reason that the income disparity has become such a big problem is when assets recover from much lower levels, the people that own the assets naturally, the disparity is going to wind but when everything catches up with he

get to a more normal distribution. do you think the government needs to do something? >> this isn't solving everything on income equality but i think it is very helpful in a weak global economy outside the united states. >> do you still think that income inequality is one of the next great challenges or do you think it fixes itself? >> i don't think it fixes itself. we are in this world where there is more cyberand automation. it is a problem we have to fix with education. there is not some simple fix through just transfers. that's got to be a piece of it in the transition. >> we have been trying that. i don't know if that isn't the way to do it. obamacare was in large part a redistribution vehicle, pure and simple. you are not saying anything about the possible geopolitical

effects of oil. >> that's right. >> from a nuclear arms country. things could get out of hand. >> certainly there will be some low-level things. if venezuela defaults. russia is the big question mark. they probably couldn't take a $90 price of oil and with the price of oil what it is, they are likely to go into a banking crisis. they are already bailing out banks. it is hard to know how it is going to play out. how they might act out, that's a big source tension. >> have you, the author of "too big to fail," you who have written a lot on what happened, either one of you think it is a more than a once in a generation phenomenon. is there anything so systemic we need to worry about something like that in the next ten years? >> in china, it could happen. i think here, it won't be. >> i'm interviewing you two. you are not going to answer. >> i'm not going to disagree

with him. the question i have for him, it does happen in china. are we as infected as the rest of the world was when we had our own kras sis own crisis? >> no. we are feel teeing in china. germany is slowing down, because china is slowing down. we will feel it big-time. we are not as integrated with the financial sector with china. coming up, a disrupp toretor for your pets. josh lipton has that when we return. jeremy segal, market prediction right on track. find out how bullish he is for

2015.

♪ the all new, head turning cadillac

ats coupe. it's irresistible. ♪ the holidays, a popular time for travel, big business for kennels as owners leave their pets behind. call it the air b&b for dogs. josh lipton we were talking about pets earlier. how does this work?

>> so, joe, it called rover a place for pet owners with pet siters. go online, find a dog sitter near you. book a reservation at their house. there are now 25,000 siters available across the u.s. the company's ceo says, business booms during the holidays. >> unlike the summer where people can travel throughout the summer, during the holidays people travel on thanksgiving and on christmas. there is definitely a wave of people looking to can boo. pretty much all the same days. it is a crazy time of year for us. >> rover makes money by taking a 15% commission from its siters who typically charge $30 a night. menlo ventures invented 12 million in the start-up. rivals include dog vaca, which has 20,000 dog siters of its own. it has already raised $47

million from top tier bcs such as benchmark capital the. not everybody is a fan. just because people love dogs doesn't mean they are qualified to care for dogs. still, rover says every sitter on his site is verified and reviewed and dropping off your dog with a sitter beats leaving him in a kennel. guys, back to you. >> horror stories on both sides. in a kennel, i have heard dogs getting in a fight or something in the kennel. it has come back missing an eye. it is tough. i was thinking, andrew, what about starting out like this just renting a dog for the kids for the two boys for a week on a holiday and see if it works out. >> you would need a little dog. they are so scared of big dogs still. >> they have little dogs. >> ken rogoff, great seeing you.

"squawk on the street" begins right fou. ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla. darryl and jim have the day off. final three trading sessions of 2014 as the dow rides a seven-day